Chinese acquisition surprises

Losing bidder Infratil is surprised a Chinese company would pay $950 million for New Zealand's largest waste-management business, while opponents of foreign investment fear the new owners will "milk it for all it's worth".

Australia's Transpacific Industries Group said yesterday it had sold its New Zealand subsidiary to a wholly owned subsidiary of Beijing Capital Group, a large-scale state-owned enterprise, for $950m.

Infratil chief executive Marko Bogoievski said the infrastructure company was part of a consortium of local investors that bidded for Transpacific in New Zealand following a "lengthy and comprehensive process".

"We think we had a good understanding of the asset and we bid what we thought was a sensible number.

"We're surprised at the price [$950m] and it will be interesting to see how the market evolves with two buyers now coming out of non-traditional investors in the market."

But Tom Nickels, managing director of Transpacific Industries New Zealand, said the $950m deal with Beijing Capital Group was a fair but not high price at 8.6 times Transpacific NZ's earnings before interest, tax, depreciation and amortisation (8.6 times ebitda).

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That was the same multiple that Cheung Kong Infrastructure (CKI) paid a year ago for New Zealand's second-biggest waste management company EnviroWaste.

The sale is expected to be completed at the end of June. It is subject to approval by the Overseas Investment Office in New Zealand and approval from Chinese regulatory bodies.

NZ First leader Winston Peters said despite bids from New Zealand interests, a foreign bid was always going to win.

"This time it is a company from China bidding a high price - helped by the fact that our Kiwi investment companies are facing interest rates five times higher than those in China.

"The Overseas Investment Office, which should be the watchdog for New Zealanders, will again show its usual lack of concern by rubber-stamping the $950m deal with the full backing of the Government."